Powering Up Together
EXECUTIVE
SUMMARY
Both the City of Boston and the
Commonwealth of Massachusetts have
pledged to achieve net zero greenhouse gas
emissions by 2050, and have embarked on
ambitious efforts to reach these goals. Both
have also set an interim goal of reducing
emissions by 50 percent by 2030.
In November 2022, however, the Boston Foundation’s Inaugural Boston Climate Report found Boston was off-track to meet its interim goal. The report called for an all-hands-on-deck response and identified four “Big Lifts”—multidecade, multiplatform projects—that would markedly speed progress. Number one: "Retrofitting the Small Building Stock." Not only do many small buildings need to be electrified, the report said, but they also offer opportunities to deploy rooftop solar and improve living conditions.
We define “small buildings” primarily as the roughly 70,000 residential buildings occupying fewer than 20,000 square feet, and thus exempt from BERDO, the city’s greenhouse-gas ordinance governing larger buildings. The category also includes 6,165 non-residential small buildings, including restaurants, clothing stores, labs, gyms, laundries, flower shops, libraries, and houses of worship, according to estimates by the Building Electrification Institute (BEI).
Reducing greenhouse gas emissions in existing buildings by increasing energy-efficiency, replacing fossil fuel-powered appliances with electric ones, and adding renewable energy when possible is a multi-step process we’ll refer to in this report as “powering up.” Powering up all of Boston’s small buildings might address more than 19 percent of the city’s greenhouse gas emissions.
Yet progress on this front has been frustratingly slow and hard to track. Using heat pumps—efficient, electric-powered heating and cooling appliances—as an indicator of retrofit progress is telling. Despite increasing interest in heat pumps and their central role in achieving the City’s emissions reduction goals, their adoption has been only inching ahead. Data show that over the past 14 years, Boston issued permits for fewer than 700 of these appliances. That’s well behind other efficiency updates such as solar and weatherization; meanwhile, around 15,000 new gas systems were installed over that time.
Recent data do show a steadily upward trend, however, that has started to accelerate over the past two years. For instance, Boston's Green New Deal Data Dashboard, which instituted a new tracking system for such projects over the last year, found that 597 household units received heat pumps between 2023 and 2024.
This is encouraging, but not enough. A report from the BEI earlier this year stated that at the current rate, it would take Mass Save, the Commonwealth’s leading energy-efficiency incentive provider, almost 100 years to reach all of Boston’s low- and middle-income homes.
AUTHOR
Katherine Ellison
Independent Journalist & Writer
EDITOR
Sandy Kendall
Senior Editorial Director, The Boston Foundation
DESIGNER
Mel Isidor
Designer & Urbanist, Isidor Studio
ADVISORS
John Cleveland, Strategic Advisor, Boston Green Ribbon Commission
Sarah Kearney, Founder & Executive Director, Prime Coalition
Amy Longsworth, Executive Director, Boston Green Ribbon Commission
Keith Mahoney, Vice President of Public Affairs, The Boston Foundation
Rebecca Price, Senior Director, Donor Alignment and Impact Investing, The Boston Foundation
Michael J. Walsh, Partner, Groundwork Data
PROJECT LEAD
Julia Howard, Senior Program Officer of Climate, The Boston Foundation
QUESTIONS OR COMMENTS
ABOUT THE REPORT?
Contact Julia Howard at
The Boston Foundation
Email
HURDLES
The work ahead is daunting, due to a long
list of obstacles beginning with staggering
expense. Powering up all of Boston’s small
homes could cost between $13.5 and $15.8
billion, the lion’s share of which stems
from decades of deferred maintenance,
resulting in serious health and safety
problems, primarily in Boston’s mostneglected
neighborhoods. Such repairs
must precede any energy-efficiency
improvements, and while new government
resources will help narrow the funding gap,
they won’t close it. Even after government
spending and industry rebates, the BEI has
found a $7-9 billion funding shortfall.
Our investigation revealed other major reasons for the slow progress, helping to explain why, even as Massachusetts touts its net-zero goal, the Commonwealth’s gas utilities are planning to invest as much as $20 billion in repairs of aging pipes to transport fossil fuels.
Arguably the most intractable challenge is the current high cost of electricity compared to gas—a matter of public policy. Massachusetts has some of the highest electricity rates in the country. Switching to electricity can leave some homes with at least temporarily higher utility bills. Officials at both Mass Save and Action for Boston Community Development (ABCD), an antipoverty group conducting outreach to low-income residents, have told us that it’s for this reason that they have at times actually discouraged gas customers from getting heat pumps, devices that can dramatically cut carbon emissions.
Another policy-related challenge is Mass Save’s role as the lead entity in pursuit of Boston’s climate goals. The ratepayer-funded, utility-run, government-managed program is Boston’s designated energy efficiency incentive provider, with a nearly $5 billion proposed budget for 2025-2027. But critics question whether utility firms are best positioned to champion climate goals.
Legislators should also address obstacles to fair financing of retrofits. The costs of almost all incentives and concessionary loans are now shouldered by ratepayers, a strategy that has proved both inadequate and inequitable. While all Massachusetts utility customers pay into the system, those with low incomes—and few liquid assets—are usually less able to take advantage of its benefits. Similarly, renters, households that speak languages other than English, and small businesses are chronically underserved by Mass Save. Government action might help speed progress in powering up by supporting new tools including on-bill financing or other innovative means to equitably fund deferred maintenance and retrofits.
Finally, local and Commonwealth policy changes will also be needed to address workforce shortages, with too few trained contractors, and increasing demands on an overtaxed electrical grid.
OPPORTUNITIES
Despite this array of public-policy challenges, private philanthropists could play a leading role in helping Boston get on track to be a national leader in the fight against climate change and particularly in tackling the challenge of powering up small buildings.
Of course, in the short-term, impact investors and mission-driven venture capitalists can explore investments in existing ventures, some of which may be profitable in time. That includes new geothermal energy networks and a long list of emerging technologies aimed at improving options for heating and cooling systems, insulation paneling, battery storage, and more. Corporations seeking to conform to new environmental regulations may want to investigate a new kind of greenhouse-gas “offset,” derived from powering up buildings.
WHAT IS CATALYTIC CAPITAL?
When we talk about catalytic capital, we refer to an investment that accepts higher risks or lower returns compared with a conventional investment. Its aim is less profit than impact. Its presence enables other sources of capital that cannot tolerate the same risk to invest in potentially high-impact endeavors. In other words, by unlocking other investments, it serves as a “catalyst” to achieving full funding for an impact enterprise.
In a potentially more transformative option, impact capital could help pay to design and launch an effort—independent or attached to an existing organization—to streamline and coordinate the powering-up of Boston’s small buildings. Currently more than a dozen actors are vying to participate in Boston’s quest to electrify small buildings, with property owners often bewildered by an ever-changing field of organizations, technologies, incentives and financing mechanisms. Building owners and tenants need a seamless process to achieve affordable, comprehensive retrofits, and Boston needs a clear sense of who is in charge of this key city objective.
CALL TO ACTION
Based on our review of this report, the Boston Foundation, with the support of the Boston Green Ribbon Commission and Prime Coalition, is calling on systems-focused philanthropists seeking long-term climate and equity impact in Boston to help develop a new effort to transform the way Boston pursues its small building retrofit goals.
Philanthropic capital could support a robust design process for identifying and developing a program within an existing entity or creating a new entity to help steer private and public players to collaborate on specific, measurable outcomes.
We recommend that a dedicated team be established to work collaboratively with existing organizations to explore options and weigh the strengths and weaknesses of each approach against the needs identified by this report. This team should be capable and eager to advance racial equity from the beginning of the design phase onward, sharing our view that racial equity is critical to success.
A thoughtful design phase would include:
- ➤ Recruiting and hiring staff members;
- ➤ Exploring elements of a “business plan” for the proposed program that would incorporate a budget, personnel, expected outcomes, and governance;
- ➤ Obtaining continued philanthropic participation to construct, fundraise, implement, and evaluate the program beyond the design phase.
With adequate support, we envision that a program designed through 2026 could be launched as early as 2027.